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Natwest & Barclays share prices in strong form ahead of full-year results

UK bank earnings will focus on the year to come, and less on the numbers themselves, while their share prices look to build on recent gains.

Natwest & Barclays earnings – when do they report?

Barclays reports earnings on 18 February, while NatWest reports on 19 February.

Natwest & Barclays earnings – what to expect

ESP % change YoY Revenue % YoY
Natwest 8.2p -66% £21.6 billion -0.1%
Barclays 1.6p -96% £10.9 billion -16.3%

In terms of headline numbers, it is likely to be a difficult year, but as with US banks investors will be more concerned about the year to come. This is where the outlook brightens, although it is hard for it to be much worse. The success of the UK’s vaccination programme means that it is likely that the UK economy will head back towards a greater degree of normality. Already mortgage activity is picking up, and corporate lending should also improve as companies become more confident about the outlook. The market is likely to give UK banks a ‘free pass’ on their earnings figures, so long as they can demonstrate that there are signs of improvement and that this will continue into the second half of the calendar year.

Natwest & Barclays – broker estimates and price performance

Natwest is covered by 24 brokers, of which seven have ‘buy’ recommendations, with 12 ‘holds’ and five ‘sells’. The current median target price is 182p, a 2.8% premium to the current price of 177p (15 February). Natwest sees its price move 5.5% on average on results day, while current options pricing points towards a move of 4.5%.

For Barclays, 12 analysts have ‘buy’ ratings, with 11 ‘holds’ and just two ‘sells’. Its median broker target price is 168p, a 10.5% premium to the 152p of 15 February. The average move on results day is 4%, compared to current options pricing of 2.8%.

Natwest share price – technical analysis

Natwest shares have finally managed a decent push above recent resistance around 170p, after faltering at this level since late November. A dip into 145p once again found support, and gave the price a springboard to rally to a near 12-month high. Continued price action above 170p supports the bullish view.

Barclays share price – technical analysis

The dip below 134p support in late January was a worrying moment for those hoping for a further rebound in Barclays shares, but the price recovered and has moved back towards recent highs, continuing the broader recovery that began at the end of September. This bullish view remains in place unless we move below 140p and below rising trendline support from the September low.

Better times ahead for UK banks

Like most firms, the big UK banks will be keen to put 2020 behind them. Dividends are set to return, providing a further attraction for these stocks, and from a price standpoint the recovery from the lows of autumn 2020 is intact. Much will depend on the UK’s vaccine rollout, but for now the outlook is encouraging.

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